The Power In The Land. Fred Harrison
providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last, too, enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.6
All was well, then; the ‘fitness’ of the system was bestowed with a certain ‘propriety and beauty’7 that was the free market.
Smith appears to confuse the differences between the division of the products of the earth, with the value of that output as it is exchanged across the stalls in the market towns. Landlords may not hoard all the food that is grown on their land; but nor do they distribute its value on a nearly equal basis, as Smith would have us believe — as any landless beggar sunning himself on the side of the highway could have told the young Professor of Moral Philosophy from Glasgow.
Adam Smith was not a fool, and his attention to detail was meticulous. So we can account for the apparent shallowness of his economic reasoning only in terms of his having to fit reality to his theory. He must, at the outset, have decided that property rights to land should not be distributed in the new industrial system. In doing so, he was hamstringing capitalism.
In The Wealth of Nations,8 Smith attacked the manufacturers who sought to monopolise markets in order to inflate the price of their products; yet while he recognises that rent was a monopoly price for the use of a finite resource, he did not recommend any action to destroy that particular monopoly. He acknowledged that ‘perfect liberty’ was associated with the need to allocate capital and labout to their most efficient uses, to maximise the output of goods at the lowest possible prices; yet he condoned the under-use or misallocation of land. In sum, then, he expected labour and capital to work their damndest to maximise the welfare of society; yet he sought to protect the landlords, whose income and property rights were not to be invaded for the sake of improving the operations of ‘the invisible hand’.
The theoretical formulations in The Wealth of Nations could have been used to predict the tragedies which would consequently afflict industrial society. For he offered a perfectly clear hypothesis about the determination of economic rent, containing all the elements of the theory which was later to be popularly associated with the name of David Ricardo. With this theory, Smith predicted that progress was biased in favour of the landlord class.
... every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landlord, his power of purchasing the labour, or the produce of the labour of other people.9
Anticipating Henry George's formulations on the distribution of national income by over a century, Smith even noted that ‘The real value of the landlord's share, his real command of the labour of other people, not only arises with the real value of the produce, but the proportion of his share to the whole produce rises with it'.10 Smith was under no illusions that rent was an unearned income; and here he acknowledges that it was a rising proportion of national wealth, a fund which lent itself peculiarly well to finance those activities that were suitable candidates for public sector expenditure.
But instead of grasping the historic opportunity presented to him of influencing events for the good of all, Smith reinforced the structural defects and human prejudices which were consequently unleashed in all their fury as never before in the history of mankind, given a new dimension by the scale of operations which is a distinguishing characteristic of the industrial mode of production. Whereas in a ‘natural' system based on agriculture, suffering arising from exploitation was limited to individual cases or small groups, now it was transformed into the disgusting deprivations of millions, the malevolent disease stretching itself right round the globe in a system which failed to correspond with Smith's vision of natural harmony.
Smith would have abhored the living portrayal of his system. Unlike his predecessors in the first half of the 18th century,11 he advocated high wages as a stimulus to hard work. He was anxious about what sociologists today call ‘alienation’, the dulling effect on the spirits of people who specialised in monotonous conveyor-belt activities in the factory. He was a humane man who recognised that, in addition to self-interest, the virtue of ‘sympathy' was a necessary part of the development of individual personality and of civilized society.12
The competition of Smith's ‘free' market was complemented by the cooperation entailed by the division of labour. Such defects as may arise in the market he sought to attribute to personal motives (as when businessmen conspire to fix prices) rather than to institutional inadequacies. The model that he delineated was not amoral; on the contrary, he saw it as founded on natural justice.
For Smith, natural justice established itself of its own accord for every man, so long as the laws of justice were not violated. Competition was virtuous, and not the naked thing of Marx's nightmares, the operation of some mythical ‘law of the jungle’ in which the weak are destroyed by the strong. One of Smith's rules was the concept of fair play. He illustrated what he understood by this rule, as it applied to each and every person.
In the race for wealth, and honours, and preferments, he may run as hard as he can, and strain every nerve and muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of.13
The equal opportunity for everyone to strive as hard as he or she could, and be rewarded accordingly, in a growing economy which ensured the employment of all, was an intrinsic part of his vision of the good life. So long as all the participants played the game fairly, according to the rules, all would be well. But what if the rules handicapped some of the players in such a way that there was no fair way in which they could either win the race or even reach the finishing line ? What if the rules prevented some of the would-be participants from even joining the game ? These were critical questions to which Smith should have addressed himself, for the structure of property rights, and in particular the monopoly of land, biased the system against some of the players.
Smith may, as some have stated, ‘laid about the landlords in his rhetoric’,14 but in fact he proposed nothing to deal with them. On the contrary, he sought to excuse the disparity of wealth and income, and was insensitive to the way in which these would interfere with the dynamics of a competitive system.
Adam Smith recognised that rent was exacted by the use of monopoly power,15 and he did not try to hide his appreciation of that fact. Landlords, he agreed, ‘are the only one of the three orders whose revenue costs them neither labour nor care, but comes to them, as it were, of its own accord, and independent of any plan or project of their own’.16 But he sought to excuse them by invoking a general psychological disposition.
As soon as the land of any country has all become private property, the landlords like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.17
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